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The Victors III

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Part III

Z Magazine, April 1991


In the first two segments of this series, I raised the question that at once comes to mind amidst the cheers for the glorious victory of the West in the Cold War: how are the victors faring at the moment of their triumph? A survey of the domains of the state capitalist industrial societies provides a stark answer: we find an "unrelenting nightmare," in the accurate words of those who have enjoyed the kind tutelage of the West. The catastrophe of capitalism could not be more vivid and dramatic.

Notice that the question raised is precisely the right one. One will learn next to nothing from a comparison of Eastern and Western Europe. In contrast, it is quite reasonable to compare regions that were more or less similar in relevant respects 80 years ago, but have since followed a different course: subjugation to Leninist-Stalinist tyranny and its aftermath (the USSR and Eastern Europe), or domination by the state capitalist democracies (the conventional Third World).

Neither of these regions is homogeneous, and their prior histories differ as well. But to a first approximation, it is reasonable to describe large parts of both regions, before World War I, as roughly comparable in social and economic development, and relation to the West. At the time, Russia was developing, though it was far more backward than Western Europe and not closing the gap, and by 1914, "becoming a semi-colonial possession of European capital," historian Teodor Shanin observes. Making a similar point, economic historian Alexander Gerschenkron notes that "in 1913, that is, thirty-five years after Bulgaria's liberation, nearly 80 percent of all the plows used in Bulgarian farming were most primitive wooden implements," and in the 1930s, "wooden plows were still more numerous than the iron ones." Similar observations hold generally, so it appears, though comparative studies seem to be few.1

It is therefore of some interest to ask how Guatemalan peasants or Brazilian slum dwellers would react, were they to find themselves suddenly transported to Poland or Bulgaria or the Ukraine. We learn a good deal about ourselves by pursuing the inquiry, and also by observing how the obvious questions are stifled and eliminated in the chorus of self-adulation.

Some Unheard Voices

The victims, of course, do not join the chorus, but as always, their voices remain unheard. Thus, there is much pretense of concern over the murder of the Jesuit intellectuals in El Salvador, but it does not reach as far as attending to anything they say on any topic, including this one, even though -- or rather because -- one might learn a good deal from the exercise. On the question at hand, the journal Proceso of the Jesuit University UCA in San Salvador, where the priests were assassinated, has this to say:

The so-called Salvadoran `democratic process' could learn a lot from the capacity for self-criticism that the socialist nations are demonstrating. If Lech Walesa had been doing his organizing work in El Salvador, he would have already entered into the ranks of the disappeared -- at the hands of `heavily armed men dressed in civilian clothes'; or have been blown to pieces in a dynamite attack on his union headquarters. If Alexander Dubcek were a politician in our country, he would have been assassinated like He'ctor Oquel! [the social democratic leader assassinated in Guatemala, by Salvadoran death squads, according to the Guatemalan government]. If Andrei Sakharov had worked here in favor of human rights, he would have met the same fate as Herbert Anaya [one of the many murdered leaders of the independent Salvadoran Human Rights Commission CDHES]. If Ota-Sik or Vaclav Havel had been carrying out their intellectual work in El Salvador, they would have woken up one sinister morning, lying on the patio of a university campus with their heads destroyed by the bullets of an elite army battalion.2

The comparison between the Soviet and U.S. satellites is so dramatic that it takes real dedication not to perceive it, and outside of Western intellectual circles, it is a commonplace. A writer in the Mexico's leading daily comments on the "striking contrast" between Soviet behavior toward its satellites and "U.S. policy in the Western Hemisphere, where intransigence, interventionism and the application of typical police state instruments have traditionally marked Washington's actions": "In Europe, the USSR and Gorbachev are associated with the struggle for freedom of travel, political rights, and respect for public opinion. In the Americas, the U.S. and Bush are associated with indiscriminate bombings of civilians, the organization, training and financing of death squads, and programs of mass murder" -- not quite the story in New York and Washington, where the United States is hailed as an "inspiration for the triumph of democracy in our time" (New Republic).3

A prominent Latin American theologian, Pablo Richard, also fails to see matters as he is informed he does by the New Republic commissars. Richard is professor of theology at the National University of Costa Rica and a leading figure in the formation of the base Christian communities, a prime target of the U.S.-backed savagery of the Reagan-Bush years (enthusiastically supported by the New Republic and others who now bask in their inspiring triumph) because they sought to organize the poor, threatening to bring democracy and social reform, the ultimate crime. Richard compares the current situation of the Third World to that of the early Christians under the Roman Empire, which Christians saw as "the Beast, a murderous idolatrous Beast," who could not be confronted with force, because it is far too powerful and violent, but must be confronted ethically and spiritually: "This new way of confronting imperialism in the decade of the `90s, which emphasizes cultural, ethical, spiritual, and theological confrontation, challenges in a special way the [Christian base communities] and the Church of the Poor," Richard writes.4

Others use different terms to express similar perceptions. The essential points, again, are a commonplace outside of disciplined Western circles, mired in ideological fanaticism and blind to the elementary (but unacceptable) realities of the world.

Latin America and the Soviet Bloc

The social, economic, and ecological catastrophes resulting from traditional Western imperialism and its more recent variants go a long way towards explaining the reluctance of many in the Third World to join the celebration of victory, and their tendency to regard the victims of Soviet tyranny with a degree of envy. Furthermore, the state terror faced on a daily basis by Latin Americans who dare to raise their heads has been qualitatively different from the repression in Eastern Europe in the post-Stalin period, terrible as that was in its own ways; and they do not share our reluctance to see the powerful and systematic influence of Washington and U.S. corporations in establishing and maintaining the grim conditions of their lives.

Another comparison that might be addressed is suggested by the huge flow of capital from the Third World to the United States and the West generally. Latin America alone transferred some $150 billion to the industrial West from 1982 to 1987 in addition to $100 billion of capital flight, a capital transfer amounting to 25 times the total value of the Alliance for Progress and 15 times the Marshall Plan, according to Latin Americanist Robert Pastor, director of Latin American and Caribbean Affairs for the National Security Council under the Carter administration. The Bank for International Settlements in Switzerland estimates that between 1978 and 1987, some $170 billion in flight capital left Latin America, not including money hidden by falsified trade transactions. The New York Times cites another estimate that anonymous capital flows, including drug money and flight capital, total $600 billion to $800 billion. This huge hemorrhage is part of a complicated system whereby Western banks and Latin American elites enrich themselves at the expense of the general population of Latin America, saddled with the "debt crisis" that results from these manipulations, and taxpayers in the Western countries who are ultimately called upon to foot part of the bill.5

Again, the situation in the Soviet satellites is different. One commentator on their affairs, Lawrence Weschler, observes that

Poles, like most Eastern Europeans, have long lived under the delusion that the Soviets were simply bleeding them dry; in fact, the situation has been considerably more complex than that. (The Soviet dominion was in fact that unique historical perversity, an empire in which the center bled itself for the sake of its colonies, or rather, for the sake of tranquility in those colonies. Muscovites always lived poorer lives than Varsovians.)

Throughout the region, journalists and others report, shops are better stocked than in the Soviet Union and material conditions are often better. It is widely agreed that "Eastern Europe has a higher standard of living than the USSR," and that while "Latin-Americans claim mainly economic exploitation," "Soviet exploitation of Eastern Europe is principally political and security-oriented" (Jan Triska, summarizing the conclusions of a Stanford University symposium on the USSR in Eastern Europe and the U.S. in Latin America).6 In the decade of the 1970s, according to U.S. government sources, the Soviet Union provided an $80 billion subsidy to its Eastern European satellites (while their indebtedness to the West increased from $9.3 billion in 1971 to $68.7 billion in 1979). A study done at the Institute of International Studies of the University of California (Berkeley) estimated the subsidy at $106 billion from 1974 to 1984. Using different criteria, another academic study by Paul Marer and Kazimierz Poznanski reaches the estimate of $40 billion for the same period, omitting factors that might add several billion, they note. When Lithuania was faced with Soviet economic retaliation after its declaration of independence, the Wall Street Journal reported that the Soviet subsidy to that country alone might approach $6 billion annually.7

Such comparisons cannot simply be taken at face value; complex issues arise, and they have never been properly addressed. The only extensive scholarly study attempting to compare the U.S. impact on Latin America with that of the USSR on Eastern Europe, to my knowledge, is the Stanford symposium just cited, but it does not reach very far. Among many striking gaps, the contributors entirely disregard repression and state terror in Latin America and the U.S. role in implementing it. Writing in May 1986, the editor states that "some left-wing forces in Latin America and all dissidents in Eastern Europe have little hope of bringing about substantive changes, either peacefully or through violence." One contributor even takes seriously (though rejecting) the absurd statement by Mexican writer (now Nobel Laureate) Octavio Paz in 1985 that it is "monstrous" even to raise the question of comparing U.S. policies with those of the Soviet Union. Most take it as obvious, hence needing no real evidence, that U.S. influence has been disinterested and benign. In fact, this 470 page study contains very little information altogether.8

Many questions would arise if such comparisons were to be undertaken in a meaningful way. Contrary to standard conventions (generally followed in the Stanford symposium), it is hardly plausible to regard U.S. security concerns in Latin America as comparable to those of the Soviet Union in Eastern Europe, or even to take seriously the conventional doctrine that security concerns are "probably the greatest factor in shaping U.S. policy toward Latin America" (Robert Wesson, presenting the "historical overview and analysis" for the Stanford symposium). In recent memory, the United States has not been repeatedly invaded and virtually destroyed by powerful enemies marching through Central America. In fact, its authentic security concerns are virtually nil, by international and historical standards. There are what are called "security concerns," but as one participant in the symposium finally concedes, after having taken them quite seriously, "U.S. national security interests in the Caribbean [as elsewhere in the hemisphere, we may add] have rested on powerful economic investments" (Jiri Valenta) -- which is to say that they are termed "security interests" only for purposes of the delusional system. Furthermore, it makes little sense to attribute to the United States greater tolerance for "political-ideological deviations" on the grounds that it does not insist on "the U.S. brand of democracy" and tolerates "authoritarian dictatorships," while the USSR insists on Leninist regimes (Valenta). What the U.S. demands is an economic order geared to its interests; the political form it takes is largely an irrelevance.9

Unless freed from the extreme ideological constraints of conventional scholarship, comparative study is bound to be largely worthless.

The matter of capital flow is also complex. In the first place, the regional hegemons are not remotely comparable in wealth and economic level, and never have been, so that their role in economic transactions will differ greatly. For another, investment has intricate effects. It can lead to economic growth, benefit certain sectors of the population while severely harming others, lay the basis for independent development or undermine such prospects. The numbers in themselves tell only a small part of the story, and have to be complemented by the kind of analysis that has yet to be undertaken in comparing Eastern Europe and Latin America.

It should be evident without further comment that the standard comparison of Eastern to Western Europe, or the Soviet Union to the United States, is virtually meaningless, designed for propaganda, not enlightenment.

Latin America and the NICs

Other subordinate and dependent systems have yet a different character. Discussing the rapid economic growth of South Korea and Taiwan after the powerful stimulus given by Vietnam war spending, Bruce Cumings observes that it resumes a process of development begun under Japanese colonialism. Unlike the West, he notes, Japan brought industry to the labor and raw materials rather than vice versa, leading to industrial development under state-corporate guidance, now renewed. Japan's colonial policies were extremely brutal, but they laid a basis for economic development. Needless to say, these economic successes, like those of Singapore and Hong Kong, are no tribute either to democracy or the wonders of the market; rather, to harsh labor conditions, efficient quasi-fascist political systems, and, much as in Japan, high levels of protectionism and planning by financial-industrial conglomerates in a state-coordinated economy.10

Comparison of the Pacific colonies of the U.S. and Japan is not common here, but right-wing Japanese are not reluctant to pursue it. Shintaro Ishihara, a powerful figure in the ruling Liberal Democratic Party, which holds a virtual monopoly of political power, observes that the countries that were once under Japanese administration are "success stories" from the economic point of view, while the Philippines are an economic disaster and the "showcase of democracy" is largely empty form. "Philippine landowners have accumulated incredible power and wealth, siphoning everything from the ordinary people," while "tradition is dismantled" in favor of a shallow and superficial veneer of American culture, "an atrocity -- a barbaric act."11

This spokesman for right-wing nationalism is plainly not a trustworthy independent source. But there is more than a little truth to what he says.

Comparison of the Latin American economies with those of East Asia (the "Newly Industrializing Countries," NICs) is another topic that has rarely been undertaken seriously. Editorials, news reporting, and other commentary commonly allege that the comparison reveals the superiority of economic liberalism, but without providing the basis for that conclusion. It is not easy to sustain, if only because of the radical departures from liberal capitalism in the success stories of Asia. As Alice Amsden in particular has emphasized, the highly touted economic successes of East Asia can be traced in no small measure to the fact that the state is not only powerful enough to discipline labor, as is the norm, but even to discipline capital, and to compel sharp departures from market principles for the sake of economic development. More generally, it is virtually the conventional wisdom (and well supported) that "late developing countries" typically rely on extensive state intervention and coordination. In fact, it is hard to find any exception, late or early. If the U.S. had kept to the principles it now imposes on the "developing world," we would probably still be pursuing our comparative advantage in producing furs, and it is hardly likely that we would ever have had, say, a steel industry. The same continues to be true of advanced industrial societies, including the United States, where the parts of the economy that remain competitive benefit from huge taxpayer subsidies and a state-guaranteed market (high tech industry via the Pentagon system being the most striking case). In Germany, to mention only one feature, the IMF estimates that industrial incentives are the equivalent of a 30 percent tariff. IMF conditions and the like are fine for weaker economies that we intend to exploit. The conditions greatly facilitate the robbery of the poor. Beyond that, their merits are less than obvious.

The comparison between Latin America and East Asia was addressed at a conference on global macroeconomics in Helsinki in 1986.12 Several contributors observe that the situation is complex, and conclude that the disparities that developed in the 1980s (though not before) are attributable to a variety of factors, among them, the harmful effects of greater openness to international capital markets in large parts of Latin America (as in the Philippines), which permitted vast capital flight, but not in the East Asian economies with their more rigid controls by government and central banks. In South Korea, for example, export of capital can carry the death penalty. Again, the standard story seems to be virtually the opposite of the truth.

Comparisons and their Pitfalls

The complexity of the issues that arise is shown in a revealing study of Indian development, in comparison to China and others, by Harvard economist Amartya Sen. He observes that "a comparative study of the experiences of different countries in the world shows quite clearly that countries tend to reap as they sow in the field of investment in health and quality of life." India followed very different policies from China in this regard. Beginning at a comparable level in the late 1940s, India has added about 15 years to added life expectancy, while China added 10 or 15 years beyond that increase, approaching the standards of Europe. The reasons lie in social policy, primarily, the much greater focus on improving nutrition and health conditions for the general population in China, and providing widespread medical coverage. The same was true, Sen argues, in Sri Lanka and probably Vietnam, and in earlier years in Europe as well, where, for example, life expectancy rose rapidly in England and Wales after large-scale public intervention in the distribution of food and health care and expansion of public employment.

But this is not the whole story. In the late 1950s, life expectancy in China plunged for several years to far below that of India because of a huge famine, which took an estimated 30 million lives. Sen attributes the famine to the nature of the Chinese regime, which did not react for three years, and may not even have been aware of the scale of the famine because the totalitarian conditions blocked information flow. Nothing similar has happened in India with its pluralist democracy. Nevertheless, Sen calculates, if China's lower mortality rates prevailed in India, there would have been close to 4 million fewer deaths a year in the mid-1980s. "This indicates that every eight years or so more people in addition die in India -- in comparison with Chinese mortality rates -- than the total number that died in the gigantic Chinese famine," the worst in the world in this century.

In further confirmation of his thesis, Sen observes that life expectancy in China has suffered a slow decline since 1979, when the new market-oriented reforms were undertaken. Another relevant example is the Indian state of Kerala, long under leftist rule and with "a long history of extensive public support in education, health care, and food distribution." Here, improvement in life expectancy is comparable to China, though it is one of India's poorer states.13

Human Values

These are all serious and difficult questions, with far-reaching human consequences. The development strategies imposed upon the Third World by Western power, implemented by the international economic institutions or the states and corporations themselves, have enormous effects on the lives of the targeted populations. The record shows plainly enough that the policies that are advocated or enforced by the Western powers, and the confident rhetoric that accompanies them in official pronouncements and other commentary, are guided by the self-interest of those who hold the reins, not by any solid understanding of the economics of development, or any serious concern for the human impact of these decisions. Benefits that may accrue to others are largely incidental, as are the catastrophes that commonly ensue.

As the collapsing Soviet system resumes traditional quasi-colonial relations with the West, it is coming to be subjected to the same prescriptions -- in part by choice, given the intellectual vacuity that is one of the consequences of decades of totalitarian rule. But imposition of Third World norms is bound to meet resistance. One Polish critic writes that if the popular Chicago School

words become flesh, this government would be the first in the history of the world to adhere firmly to this doctrine. All developed countries, including those (such as the Federal Republic of Germany) whose governments pay obeisance to the liberal doctrine, apply a wide spectrum of government interventions, such as in resource allocation, in investments, in developing technology, income distribution, pricing, export and import.14

If resistance follows the path often taken in the Third World, it is likely to elicit the classic response.

On a visit to Europe a few days before he was assassinated by elite government forces in San Salvador in November 1989, Father Ignacio Ellacuria, rector of the University of Central America, addressed the West on the underlying issues. You "have organized your lives around inhuman values," he said. These values

are inhuman because they cannot be universalized. The system rests on a few using the majority of the resources, while the majority can't even cover their basic necessities. It is crucial to define a system of values and a norm of living that takes into account every human being.15

In our dependencies, such thoughts are subversive and can call forth the death squads. At home, they are sometimes piously voiced, then relegated to the ashcan in practice. Perhaps the last words of the murdered priests deserve a better fate.


1 Shanin, Russia as a `Developing Society' (Yale, 1985), vol. 1, 186f., quoting D. Mirsky, Russia, A Social History (London 1952), 269; Gerschenkron, Economic Backwardness in Historical Perspective (Harvard, 1962), 216.

2 Quoted by Jon Reed, Guardian (New York), May 23, 1990.

3 John Saxe-Fernandez, Excelsior, Nov. 21, 1989, in Latin America News Update, Jan. 1990; TNR, March 19, 1990.

4 Pasos, publication of the Ecumenical Department of Investigation in San Jos, Costa Rica; LADOC (Peru), Nov./Dec. 1990.

5 Pastor, Foreign Policy, Winter 1988-9; Jeff Gerth, NYT, Feb. 12, 1990.

6 Weschler, "Poland," Dissent, Spring 1990; Triska, "introduction," in Triska, ed., Dominant Powers and Subordinate States (Duke, 1986).

7 Raymond Garthoff, Detente and Confrontation, 499; M. Marrese and J. Vanous, Soviet Subsidization of Trade with Eastern Europe (California, 1983); Marer and Poznanski, "Costs of Domination, Benefits of Subordination," in Triska, op. cit.; Peter Gumbel, "Gorbachev Threat Would Cut Both Ways," WSJ, April 17, 1990.

8 Triska, op. cit., 11; Paz cited by Jeffrey Hughes, 29.

9 Wesson, Valenta, in Triska, op. cit., 63, 282.

10 On these matters, see particularly Alice Amsden, Asia's Next Giant (Oxford, 1989), and for an overview, Amsden, "East Asia's Challenge -- to Standard Economics," American Prospect, Summer 1990. For some recent reflections on Taiwan and Japan, Carl Goldstein, Bob Johnstone, Far Eastern Economic Review, May 3, May 31, 1990. Cumings, "The origins and development of the Northeast Asian political economy," International Organization 38.1, Winter 1984.

11 Akio Morita and Shintaro Ishihara, The Japan That Can Say No (Konbusha, Tokyo), translation distributed privately, taken from Congressional Record, Nov. 14, 1989, E3783-98.

12 Tariq Banuri, ed., No Panacea: the Limits of Economic Liberalization (Oxford, forthcoming).

13 Sen, "Indian Development: Lessons and Non-Lessons," Daedalus, Vol. 118 of the Proceedings of the American Academy of Arts and Sciences, 1989. For further details on the Kerala exception, see Richard W. Franke and Barbara H. Chasin, Kerala: Radical Reform As Development in an Indian State (Institute for Food & Development Policy, Food First Development Report No. 6, October 1989).

14 Mieczyslaw Mieszczanowski, Polityka, Dec. 16, 1989, cited by Abraham Brumberg, Foreign Affairs, "America and the World," 1989-90.

15 Envio (Managua), May 1990.